Either Bernanke has no discernment or he is ‘making fools’ of the nation´s lawmakers.
The WSJ reports:
Federal Reserve Chairman Ben Bernanke laid out aggressive long-run markers for lawmakers consumed in budget battles with the White House.
While Mr. Bernanke wants Congress to avert the sequester and a sharp fiscal contraction in the short-run, he said the government should be focused on reducing debt levels in the long run. President Barack Obama has focused recently on stabilizing debt-to-GDP. Mr. Bernanke, in his testimony, effectively said that wasn’t enough.
“Between 1960 and the onset of the financial crisis, federal debt averages less than 40% of GDP,” Mr. Bernanke said. “This relatively low level of debt provided the nation much-needed flexibility to meet the economic challenges of the past few years. Replenishing this fiscal capacity will give future Congresses and Administrations greater scope to deal with unforeseen events.”
He´s ‘butting in’ on other peoples turf, diverting attention from his own very serious mishaps. Worse, his errors were directly responsible for the ‘debt explosion’. That´s because when interest rates were pushed down to ‘zero’ he was instrumental in asking for ‘fiscal help’, with many, or most, prodded along by the arguments of Mr. Krugman, convinced monetary policy had become ‘powerless’.
But Congress is very badly assisted and never asked Bernanke why he doesn´t set “aggressive long run markers” for the FOMC itself? Mr. Bernanke said stabilizing the Debt/GDP ratio wasn´t enough. Congress should have countered and asked why he thinks ‘stabilizing’ NGDP at such a low trend level path is enough, even if it implies a much lower level of employment.
But Bernanke is ‘proud’ to hold the best post WWII inflation track record.